Free Printable Business Finanace Tutorial 4

1.

What is the correct Bond Value equation

a)

$PV\ =\ \frac{PMT}{I}\left(1\ -\ \frac{1}{\left(1+I\right)^N}\right)+\frac{FV}{\left(1+I\right)^N}$

b)

$PV\ =\ \frac{PMT}{I}\left(\ \frac{1}{\left(1+I\right)^4}+1\right)+\frac{FV}{\left(1+I\right)^4}$

c)

$PV\ =\ \frac{FV}{I^N}\left(1\ -\ \frac{1}{\left(1+I\right)^4}\right)+\frac{FV}{\left(1+I\right)^4}$

d)

$PV\ =\ \frac{PMT}{I}+\left(\frac{FV}{\left(1+I\right)^4}-1\right)$

2.

Which one of the following is not part of the bond certificate?

a)

Par Value

b)

Maturity Rate

c)

Price of Bond

d)

Yield to Maturity

3.

Short term bonds have _____ interest rate risk and ____ reinvestment rate.

a)

Low, High

b)

No, Low

c)

Low, No

d)

High, High

4.

Long term bonds have _____ interest rate risk and ____ reinvestment rate.

a)

High, Low

b)

Low, No

c)

High, High

d)

Low, No

5.

The total expected return (YTM) = _______

a)

Current Yield + Capital Gains Yield

b)

$\frac{Coupon\ Rate}{Bond\ Value}$

c)

$\frac{Annual\ Coupon\ Payments}{Total\ time\ to\ maturity}$

d)

Capital Gains Yield

6.

When the bond price is higher than the par value, the bond is known as a ________.

a)

Premium Bond

b)

Par Bond

c)

Discount Bond

d)

James Bond

7.

Coupon Payment = ___________ x _____________

a)

Par Value, Coupon Rate

b)

$\frac{YTM}{Coupon\ Rate}$

c)

Bond Price, Coupon Rate

d)

Par Value, YTM

8.

When Interest Rate increases, Bond price increases

a)

True

b)

False

Business Finanace Tutorial 4

Total questions: 8

Worksheet time: 4mins

Similar Resources on Wayground